Carla Vista Co. sells $647,600 of receivables with a fair value of $659,400 to Carla Vista Trust in a securitization transaction that meets the criteria for a sale. Carla Vista Co. receives full fair value for the receivables and agrees to continue to service them, estimating that the fair value of this service liability component is $26,930. Prepare the journal entry for Carla Vista Co. to record the sale.

Carla Vista Co. sells $647,600 of receivables with a fair value of $659,400 to Carla Vista Trust in a securitization transaction that meets the criteria for a sale. Carla Vista Co. receives full fair value for the receivables and agrees to continue to service them, estimating that the fair value of this service liability component is $26,930. Prepare the journal entry for Carla Vista Co. to record the sale.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter12: Intangibles

Section: Chapter Questions

Problem 18E

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On January 1, 2021, Globe Company sold a piece of machinery to Troll Company for P2,400,000. Because of the entity’s commitments to its customers to provide their needs for the next three years, Globe Company simultaneously leased back the machinery. The transfer of the asset to the buyer qualifies to be accounted for as a sale under IFRS 15. Information relating to this transaction follows:• Fair value of machinery- P2,200,000• Carrying amount of machinery- P1,700,000• Remaining useful life of the machinery- 8 years• Lease term- 3 years• Annual rent payable at beginning of each year, starting on January 1, 2021- P500,000• Market rate of interest- 10%• PV of an ordinary annuity of 1 at 10% for 3 periods is 2.4869• PV of an annuity due of 1 at 10% for 3 periods is 2.7355 What is the amount recorded by Globe Company for the right-of-use asset on January 1, 2021? (round off your final answer to the nearest peso value)
On January 1, 2021, Globe Company sold a piece of machinery to Troll Company for P1,900,000. Because of the entity’s commitments to its customers to provide their needs for the next three years, Globe Company simultaneously leased back the machinery. The transfer of the asset to the buyer qualifies to be accounted for as a sale under IFRS 15. Information relating to this transaction follows:• Fair value of machinery- P2,200,000• Carrying amount of machinery- P1,700,000• Remaining useful life of the machinery- 8 years• Lease term- 3 years• Annual rent payable at the end of each year, starting on December 31, 2021- P500,000• Market rate of interest- 10%• PV of an ordinary annuity of 1 at 10% for 3 periods is 2.4869• PV of an annuity due of 1 at 10% for 3 periods is 2.7355 How much is the gain on sale-leaseback? (round off your final answer to the nearest peso value)
On January 1, 2021, Globe Company sold a piece of machinery to Troll Company for P1,900,000. Because of the entity’s commitments to its customers to provide their needs for the next three years, Globe Company simultaneously leased back the machinery. The transfer of the asset to the buyer qualifies to be accounted for as a sale under IFRS 15. Information relating to this transaction follows:• Fair value of machinery- P2,200,000• Carrying amount of machinery- P1,700,000• Remaining useful life of the machinery- 8 years• Lease term- 3 years• Annual rent payable at the end of each year beginning, December 31, 2021- P500,000• Market rate of interest- 10%• The present value of an ordinary annuity of 1 at 10% for 3 periods is 2.4869. • The present value of an annuity due of 1 at 10% for 3 periods is 2.7355 How much is the interest expense for 2021 on the lease liability relating to the right retained in the sale-leaseback transaction? (round off your final answer to the nearest peso value)
On January 1, 2021, Globe Company sold a piece of machinery to Troll Company for P1,900,000. Because of the entity’s commitments to its customers to provide their needs for the next three years, Globe Company simultaneously leased back the machinery. The transfer of the asset to the buyer qualifies to be accounted for as a sale under IFRS 15. Information relating to this transaction follows:• Fair value of machinery- P2,200,000• Carrying amount of machinery- P1,700,000• Remaining useful life of the machinery- 8 years• Lease term- 3 years• Annual rent payable at the end of each year beginning, December 31, 2021- P500,000• Market rate of interest - 10%• PV of an ordinary annuity of 1 at 10% for 3 periods is 2.4869• PV of an annuity due of 1 at 10% for 3 periods is 2.7355 How much is the lease liability recorded on January 1, 2021?
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Morley Manufacturing has notes receivable that have a fair value of P810,000 and a carrying amount of P620,000. Morley decides on December 31, 2021, to use the fair value option for these recently-acquired receivables. Which of the following statements is correct regarding the election of the fair value option by Morley? a. Morley can elect to use the fair value option or amortized cost at each statement of financial position date. b. Morley reports the receivables at fair value, with any unrealized holding gains and losses reported as a separate component of comprehensive income. c. The unrealized holding gain is the difference between the fair value and the carrying amount. d. All of the choices are correct regarding the fair value option.
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On January 1, 2020, Tom Co (A seller-lessee) sells a building to MacCo (an unrelated buyerlessor) for cash of CU2,000,000. The fair value of the building at that time is CU1,800,000; the carrying amount immediately before the transaction is CU1,000,000. At the same time, TomCo enters into a contract with MacCo for the right to use the building for 18 years, with annual payments of CU120,000 payable at the end of each year. The interest rate implicit in the lease is 4.5%, which results in a present value of the annual payments of CU1,459,200. The transfer of the asset to MacCo has been assessed as meeting the definition of a sale under IFRS 15. Discuss the implication of the transactions and state the journal entries on January 1, 2020
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